CARSON CITY, Nev. — Preliminary projections say the state will have $8.8-$8.9 billion in General Fund revenues to spend for the coming two-year budget cycle.
Those were the numbers presented to the state’s Economic Forum on Nov. 8. The forum will make its final revenue projections Dec. 3 and, under state law, those numbers must be used by the governor and Legislature to build the fiscal 2020-2021 state budget.
But after Dan White of Moody’s analytics warned the five members the nation is long overdue for an economic “correction,” — a new recession — Chairman Linda Rosenthal asked staff to develop a scenario that includes the potential impacts of a recession for forum members in December.
Projections were made by the agencies that collect the revenues, the budget division and the legislative fiscal division. For the dozen major revenue sources such as sales taxes and gaming, they range form $7.4 billion to $7.5 billion over the biennium.
On top of that, there’s a consensus projection the more than 50 minor revenue streams will generate about $1.4 billion in the coming two years — a $130.5 million increase over the current cycle.
Added together, those totals come to $8.8-$8.9 billion for the biennium.
With Nevada’s economy booming, presenters projected two-year increases in sales tax revenues at anywhere from 8.6 percent to 11.4 percent. At more than $1.3 billion a year, sales taxes are Nevada’s largest revenue generator.
Second is gaming percentage fees, expected to produce about $800 million a year, which would bring in between 4 percent and 5.2 percent more than this cycle.
Other major revenues include the Modified Business Tax, Insurance Premium Tax and the controversial Commerce Tax on big businesses that’s expected to add $444.9 million to the pot in the coming two years.
But all those projections are preliminary and will be modified — in some cases significantly by economists — before the Dec. 3 meeting.
Even if the December forum approves $8.9 billion in total General Fund revenues, that’s far less than the nearly $9.4 billion state agencies have requested. The current General Fund is just more than $8 billion.
White said Moody’s Analytics is projecting a “very strong Fiscal 2019” but the economy will slow significantly in 2020.
“About the next recession, the only thing I can tell you with 100 percent certainty is there will be one,” White said. “What goes up must come down.”
He said the question is what will the magnitude of that recession be, adding the doesn’t expect another “great recession” like the one the nation just recovered from.
Russell Guindon, chief economist for the Legislative Fiscal Division, said he expects more of a “correction” than a recession per se and it may be a “growth recession” in which the Nevada economy continues to expand but much more slowly than in the past couple of years.
White said this is now the longest period between recessions but recessions are “at least in part self-inflicted.”
“Ten years is a long time to go without screwing something up,” he said.